Tag: financial management

Questions Related to financial management

The size as well as the composition of _______ assets of the business is an aspect affected by finance.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. current

  2. fixed

  3. non-current

  4. tangible

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Correct Option: B

'Financial management is the activity concerned with planning, raising, controlling and administering of funds used in the business' are the words of ________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. J. F. Brandley

  2. Guthmann and Dougall

  3. Massi

  4. Howard and Upton

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Correct Option: B
Explanation:
According to the Guthmann and Dougall, “Business finance can broadly be defined as the activity concerned with planning, raising, controlling, administering of the funds used in the business”.

Which of the following is False

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Financing Decision comprises of Financial Planning Capital Structure Decision

  2. Investment Decision comprises of Fixed Capital Management and Working Capital Management

  3. Dividend Decision includes Dividend Payment Policy Decision

  4. None

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Correct Option: D
Explanation:

Financing Decisions. Decisions concerning the liabilities and stockholders' equity side of the firm's balance sheet, such as a decision to issue bonds.

The Investment Decision relates to the decision made by the investors or the top level management with respect to the number of funds to be deployed in the investment opportunities.
The Dividend decision refers to the policy that the management formulates in regard to earnings for distribution as dividends among shareholders. The decision, in Corporate finance, is a decision made by the directors of a company about the amount and timing of any cash payments made to the company's stockholders.

"Finance may be defined as that administrative area or set of administrative functions in an organization which relates with the arrangement of each and credit so that the organisation may have the means of carrying out its objectives as satisfactorily as possible."

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. B.O Wheeler

  2. J.F. Brandley

  3. Howard and Upton

  4. William J. Stanton

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Correct Option: C
Explanation:
According to Howard and Upton, “finance may be defined as that administrative area or set of administrative functions in an organization which relates with the arrangement of each and credit so that the organization may have the means to carry out the objectives as satisfactorily as possible".

The key word that can be used to describe the basic economic problem that all societies face is:

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Selfishness

  2. Greed

  3. Inequality

  4. Scarcity

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Correct Option: D
Explanation:
Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants.
Scarcity, or limited resources, is one of the most basic economic problems we face. Scarcity arises where resources are limited and where the wants of  society are unlimited. Hence it is required that the resources are efficiently allocated.

__________ comprises two decisions,viz.,
(i) Financial Planning and
(ii) Capital structure decision.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Investment decisions

  2. Financing decisions

  3. Dividend decisions

  4. All of above

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Correct Option: B
Explanation:

The Financing Decision is yet another crucial decision made by the financial manager relating to the financing-mix of an organization. It is concerned with the borrowing and allocation of funds required for the investment decisions.

The financing decision involves two sources from where the funds can be raised: using a company’s own money, such as share capital, retained earnings or borrowing funds from the outside in the form debenture, loan, bond, etc.

The objective of financial decision is to maintain an optimum capital structure, i.e. a proper mix of debt and equity, to ensure the trade-off between the risk and return to the shareholders.

Which of the following is not a function of budgeting?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Planning

  2. Motivating

  3. Decision making

  4. Controlling

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Correct Option: C
Explanation:

Following are the functions of budgeting:-

1. Accountability
2. planning 
3. Management 
4. Control
5.Motivating

What is the break-even point?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Cost received is more then revenue.

  2. Cost received is less then revenue.

  3. Gains are more then losses.

  4. The point where there is no gain no loss.

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Correct Option: D
Explanation:

In simple words, the break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal. Break-even point can be described as a point where there is no net profit or loss. The firm just “breaks even.” Any company which wants to make normal profit, desires to achieve the break-even point. Graphically, it is the point where the total cost and the total revenue curves meet.

Scope of financial management does not include ?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Financial decisions

  2. Investment decisions

  3. Dividend decisions

  4. Note of the above

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Correct Option: D
Explanation:
D) None of the above
Financial management includes :
  1. Financial decisions
  2. investment decisions
  3. Dividend decisions.

A firm can only issue debt or equity as a source of finance. It cannot issue both at the same time.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. True

  2. False

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Correct Option: B
Explanation:

False.

Firm can issue equity and debt at the same time.
Debt financing is capital acquired through the borrowing of funds to be repaid at a later date. Common types of debt are loans. The benefit of debt financing is that it allows a business to leverage a small amount of money into a much larger sum, enabling more rapid growth than might otherwise be possible.
Equity financing refers to funds generated by the sale of stock.